It might finally be time to get readers to pay for website content

After his website's ad revenue started to drop, Craig Seitam decided to switch to a subscription model. Along the way, he discovered one important truth: 'It's all fun and games until someone asks for a credit card number.'

It’s exactly one year since we transitioned CompetitionsGuide.com.au from a 100% free service to a paid subscription model.

Why would an established website make such a radical change after so many years of success? Visitation was as good as it had ever been. The answer is no surprise: like the majority of the online and offline publishing industry, revenues were flattening.

Our business model comprised mostly of sponsored listings, that is, companies or agencies paying us to achieve volume traffic through to their campaign.  This was almost always on a cost-per-click or cost-per-lead basis. Google AdSense was also a significant earner, as it displayed extremely targeted competition campaigns to our members.

As an advertiser I love Google and Facebook. Together they account for 100% of our promotional spend in attracting new members to Competitions Guide.

As a publisher who also happens to compete with both Google and Facebook for advertising dollars, this in itself is a problem.

The duopoly of Google and Facebook have sucked advertising revenue out of our local media industry. The solutions offered tend to involve cleverer ways to attract advertising funds. But, they all lead to the same thing, and that’s getting advertisers and sponsors to pay so that the consumer can have a free ride.  

Two years ago we had looked at multiple methods of revenue increase. It wasn’t until October 2016 that the idea of changing to a subscription model was floated. On paper, the idea was logical. If our members used our site daily, every few days, or even on a weekly basis, it seemed feasible that they would pay a small annual subscription to keep enjoying the service.

I was positive but sceptical. I’m sure most website owners have a fantasy of charging their members a fee for use, but the reality is most of us don’t go there. It’s all fun and games until someone asks for a credit card number.

In the first few days of January 2017, a pop-up box explained to our members why the site would be moving to paid subscription. We were fully transparent, explaining that the revenue we made from ads and sponsors had fallen, and that an annual subscription of $36.00 (marketed as the equivalent of $3 per month) was required if they wanted to access the full site offering.

Amidst a collection of protest emails and nasty Facebook messages our ‘Go Premium’ offer kicked off relatively well, for a few days at least, before subscriptions dropped rapidly. Many of our most loyal members paid without hesitation, but most were standoffish.

New members joined as a free standard member, before seeing the paywall and bouncing away. In the first month, our conversion of first day new members from free to premium stood at 0.7%. Extremely disappointing.

It seemed obvious that we were losing members to our free competitors, who had no doubt received a windfall as the result of our actions. Then again, when we were free, our members chose our services over theirs, so did ten cents a day make such a difference? In most cases, absolutely yes, parting with 36 bucks was simply too much to outlay, but for others it was the simple principle of paying for something that used to be free.

I figured that our biggest fixable problem was that for $36, all we had changed was adding a digital tollbooth, offering nothing new in return. In a perfect world we would have simply added premium subscription to our paid content and lived happily ever after.  

We needed to rethink our content offering. A large part of our sponsored listings were competitions that are known as co-registration, that is, a single competition that can generate dozens of leads to different companies, resulting in a landslide of phone calls and emails to our members.  

Google AdSense banner ads often reflected these same competitions. The combination of both was providing a negative member experience.

Our distinct competitive advantage came from the decision to go virtually ad-free. I say ‘virtually’, as although we have removed 100% of our banner ads, we retained a small portion of sponsored listings that we saw as acceptable to our members.  

And so it goes. A year has almost passed since our new strategy launched. The most obvious question we get asked is ‘how many premium subscribers?’, which I politely decline – simply because it discloses our revenue.

What I am happy to share are some key numbers:

  • The back half of 2017, revenue increased by over 42% versus the same period the previous year
  • Of that, premium subscription accounted for 76% of total revenue
  • In the same period, ‘First Day Upgrades’ were 11%. Remember, when we launched in January 2017 it was only 0.7%!

Is it time to get customers to pay for website content? To us, the answer is obviously yes, and not just in our case. Does this mean all content-based websites can go premium?

Let me ask this in a different way.  

Is your website (or your client’s) good enough that those who visit it will pay a small amount to continue?

Whatever metric used to value a website, there is nothing that defines loyalty as much as a consumer willing to pay to use it. Plus, selling ads is nice, but from personal experience, there is no greater satisfaction than selling an online subscription.

I look forward to more websites taking the plunge.

Craig Seitam is marketing director at CompetitionsGuide.com.au.


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